Canada Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

Why you should buy this report

  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Canada Country Risk Report
Product Price
$1,195.00

Core Views

  • Canada's proposed tax changes and previous emphasis on public infrastructure investment during the Liberal Party's election campaign will derail efforts to balance the federal budget by 2019 and see the ruling party's self-imposed CAD10bn deficit cap breached.

  • The impact of low oil prices on Canada's merchandise trade balance will increasingly be offset by manufactured goods exports, paving the way for the current account deficit to narrow over the coming years.

  • Canada's central bank will maintain the overnight rate at 0.50% until 2017 when stronger economic growth will prompt the beginning of a gradual interest rate hiking cycle.

Key Forecast Changes

  • Having previously forecasted a balanced budget by 2016, we now see the federal government's revised 2019 for a balanced budget missed, forecasting a 0.5% of GDP deficit in 2016, rising to 0.8% of GDP by 2019.

  • We have revised our current account projections for Canada after a bigger-than-expected decline in oil prices, now forecasting a deficit of 3.1% of GDP and 2.7% of GDP in 2015 and 2016 respectively. We previously projected the deficit at 2.8% and 2.4% of GDP.

Key Risks To Outlook

  • High household leverage and continued housing price growth could lead to a crash in the real estate sector and trigger a recession.

  • Continued downside in global oil prices will take a toll on Canada's economy and could depress business confidence.

Macroeconomic Forecasts (Canada 2014-2018)
2014 2015f 2016f 2017f 2018f
f=BMI View. Source: National Sources/BMI
Nominal GDP, USDbn 1,761.4 1,523.2 1,502.6 1,587.2 1,679.3
Real GDP growth, % y-o-y 2.5 1.2 1.8 2.0 2.0
Consumer price inflation, % y-o-y, eop 1.5 1.6 2.0 2.2 2.2
Exchange rate CAD/USD, eop 1.16 1.39 1.38 1.36 1.33
Budget balance, % of GDP 0.1 -0.2 -0.5 -0.8 -0.9
Current account balance, % of GDP -2.3 -3.1 -2.7 -2.3 -1.9
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Election Preview: Outcome Likely To Be Determined In Ontario
8
TABLE: POLITICAL OVERVIEW
8
TABLE: HOUSE OF COMMONS LATEST SEAT PROJECTIONS BY PROVINCE
9
Long-Term Political Outlook
10
Strong Foundation, But Some Challenges From Within
10
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Investment Will Recover Amid Higher Manufacturing Activity
14
GDP By Expenditure Outlook
15
TABLE: GDP GROWTH FORECASTS
15
TABLE: PRIVATE CONSUMPTION FORECASTS
15
TABLE: GOVERNMENT CONSUMPTION FORECASTS
16
TABLE: FIXED INVESTMENT FORECASTS
16
TABLE: NET EXPORTS FORECASTS
16
Monetary Policy
16
BoC To Stay Put Until 2017
16
Monetary Policy Framework
18
Balance Of Payments
18
Gradual Rebalancing Will See Current Account Deficit Narrow
18
Outlook On External Position
19
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
20
TABLE: TOP 5 GOODS IMPORTS IN 2014
20
TABLE: TOP 5 GOODS EXPORTS IN 2014
21
TABLE: EXTERNAL COMPETITIVENESS INDICATORS
21
Exchange Rate Policy
22
CAD: Long-Term Weakness Amid Poor Terms Of Trade
22
TABLE: BMI CURRENCY FORECAST
22
Chapter 3: 10-Year Forecast
25
The Canadian Economy To 2024
25
Structural Factors Will Constrain Growth
25
TABLE: LONG-TERM MACROECONOMIC FORECASTS
25
Chapter 4: BMI Global Macro Outlook
27
Global Outlook
27
Global Growth Weak As EMs Squeezed
27
TABLE: GLOBAL ASSUMPTIONS
27
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
28
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
28
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
29

The Canada Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Canada. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Canada's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI Research.

Key Uses

  • Forecast the pace and stability of Canada's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Canada's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Canada, including currency volatility, the commodity price boom and protectionist policies.

The Canada Country Risk Report by BMI Research includes three major sections: Economic Outlook, Political Outlook and Key Sector Outlook.

Economic Outlook:

How will the Canada' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Canada through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Canada Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Canada and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Canada, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Canada over the next 5-years?

BMI's Canada country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Canada Market - Political Strengths, Weaknesses, Opportunities and Threats facing Canada.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Canada's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Canada’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Canada's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Key Sector Outlook*

Which industry sectors in Canada will grow fastest, and where are the major investment opportunities in the market?

BMI identifies investment opportunities in Canada's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry, including recent sector developments and major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2015-2019, using BMI's proprietary industry modelling technique, which incorporates key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across and within each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.